Question :
61. A company paid $150,000, plus a 6% commission, and $4,000 : 1256971
61. A company paid $150,000, plus a 6% commission, and $4,000 in closing costs for a property. The property included land appraised at $87,500, land improvements appraised at $35,000, and a building appraised at $52,500. What should be the allocation of this property’s costs in the company’s accounting records?
A. Land $75,000; Land Improvements, $30,000; Building, $45,000
B. Land $75,000; Land Improvements, $30,800; Building, $46,200
C. Land $81,500; Land Improvements, $32,600; Building, $48,900
D. Land $79,500; Land Improvements, $32,600; Building, $47,700
E. Land $87,500; Land Improvements; $35,000; Building; $52,500
62. A company purchased property for a building site. The costs associated with the property were:
Purchase price
$175,000
Real estate commissions
15,000
Legal fees
800
Expenses of clearing the land
2,000
Expenses to remove old building
1,000
What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building?
A. $175,800 to Land; $18,800 to Building
B. $190,000 to Land; $3,800 to Building
C. $190,800 to Land; $1,000 to Building
D. $192,800 to Land; $0 to Building
E. $193,800 to Land; $0 to Building
63. A company purchased property for $100,000. The property included a building, a parking lot and land. The building was appraised at $62,000; the land at $45,000 and the parking lot at $18,000. The value of the land that will be included in the accounting record is:
A. $0
B. $36,000
C. $42,000
D. $45,000
E. $100,000
64. The formula for computing annual straight-line depreciation is:
A. Depreciable cost divided by useful life in units.
B. Cost plus salvage value divided by the useful life in years
C. Cost less salvage value divided by the useful life in years.
D. Cost divided by useful life in years.
E. Cost divided by useful life in units.
65. The total cost of an asset less its accumulated depreciation is called:
A. Historical cost
B. Book value
C. Present value
D. Current (market) value
E. Replacement cost
66. A method that charges the same amount of expense over each period of the asset’s useful life is called:
A. Accelerated depreciation.
B. Declining-balance depreciation.
C. Straight-line depreciation.
D. Units-of-production depreciation.
E. Modified accelerated cost recovery system (MACRS) depreciation.
67. A method that allocates an equal portion of the total depreciable cost for a plant asset to each unit produced is called:
A. Accelerated depreciation.
B. Declining-balance depreciation.
C. Straight-line depreciation.
D. Units-of-production depreciation.
E. Modified accelerated cost recovery system (MACRS) depreciation.
68. A depreciation method in which a plant asset’s depreciation expense for a period is determined by applying a constant depreciation rate each period to the asset’s beginning book value is called:
A. Book value depreciation.
B. Declining-balance depreciation.
C. Straight-line depreciation.
D. Units-of-production depreciation.
E. Modified accelerated cost recovery system (MACRS) depreciation.
69. A depreciation method that produces larger depreciation expense during the early years of an asset’s life and smaller expense in the later years is a(n):
A. Accelerated depreciation method
B. Book value depreciation method
C. Straight-line depreciation method
D. Units-of-production depreciation method
E. Unrealized depreciation method
70. A company purchased a delivery van for $23,000 with a salvage value of $3,000 on September 1, 2010. It has an estimated useful life of fiveyears. Using the straight-line method, how much depreciation expense should the company recognize on December 31, 2010?
A. $1,000
B. $1,333
C. $1,533
D. $4,000
E. $4,600
